Pensions Pressure

Pensions Pressure

Experts say growing elderly population poses threat

Senior staff reporter

Tuesday, November 12, 2019

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JAMAICAN parents who consider their children old-age insurance against poverty will have to virtually “wheel and come again”, according to local pension funds experts.

A dramatic 50 per cent reduction in the local fertility rate, from an average 5.4 in 1960 to two in 2015, is creating a vacuum in the working age population, and is raising concerns that if the current ageing trend continues, Jamaica will lose its favourable demographic position by burdening its working age population with the dependency of their children and their elderly relatives.

The average world life expectancy rate moved, on average, from 52 in 1960 to 72 in 2017, but Jamaica's rate has moved up from 64 in 1960 to 76 in 2017. At the same time, the world's fertility rate declined from 4.9 in 1960 to 2.4 in 2015 compared to the local decline from 5.4 to two over the same period, indicating how serious the situation is becoming locally.

“The result is that fewer people are being born and more people are living longer, so there is this age dependency ratio (ADR) which is increasing,” president of the Pension Industry Association of Jamaica (PIAJ) Sanya Goffe told reporters and editors at yesterday's Jamaica Observer Monday Exchange at the newspaper's head office on Beechwood Avenue in St Andrew.

“What it means is that pensions are coming under pressure. They are finding that more and more persons are leaving the workforce and living longer, and so they need more money to be able to survive in retirement,” Goffe explained.

“And at the same time, you have a shrinking labour force, because fewer people are entering the labour market. It creates a strain on pensions in the economy. So it is important that we take responsibility, individually, because you can't expect a kind of government framework, or even persons around you, to support you in retirement,” she cautioned.

The threat to what has become a historical cultural pattern for many Jamaicans, with a high-dependency ratio indicative of a greater potential burden on Jamaicans aged 15-64 to support the non-working age, has also been given prominence recently in both the Planning Institute of Jamaica's (PIOJ) Economic and Social Survey Jamaica (ESSJ) report 2018, and the recently tabled Jamaica Survey of Living Conditions (JSLC) 2017 report.

According to the ESSJ, the share of the child population (0-14 years) accounted for 21 per cent of Jamaicans in 2018, down from 21.6 per cent in 2017. United Nations (UN) population projections for Jamaica have indicated that by 2050, the share of the child population will decline to 19.3 per cent.

And, although there was a continued rise in the proportion of the working age population (15-64) for 2018, this population of 1.9 million Jamaicans in 2018 accounted for a 69.7 per cent share of the total population, only .01 per cent less than in 2017 and a sex ratio of 97.8 males to every 100 females. However, the dependent elderly population (65 and older) moved up from 12.4 per cent in 2017 to 13.2 per cent of the total population (or 361,000) in 2018, with the UN projecting that the country's elderly population will double by 2050.

In terms of the dependency ratio, the larger share of working age people in any population creates greater potential support for both their children and their elderly dependents. However, there is concern that the rate of increase in the elderly population is threatening the once favourable demographic trend, and increasing the burden on its working age population.

According to the JSLC 2017, the age of dependency ratio is highlighting a growing “economic burden” on people in the working age population to support the dependent population.

However, the JSLC noted that the total age dependency ratio had moved from 63.6 dependents per 100 working age persons in 2008 to 54.6 dependents per 100 persons of working age in 2017.

It suggested that there is some hope keeping a low age dependency ratio if it is supported by “appropriate policy measures in education and training, and the various productive and service sectors could be used to leverage the economic potential of the demographic dividend”.

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